Understanding Chinese consumers' pre-purchase value expectations : the role of country of origin effect

Purpose: This study aims to examine the effect of country of origin (COO) on customers' value expectation and willingness to pay by employing signalling theory and cue utilisation. Design/methodology/approach: The data were collected from 386 customers via an online survey in the context of Australian food retail franchise stores in China. Findings: The findings indicate that COO origin is an important determinant of customer expectations including service quality, social value, emotional value, monetary price, behavioural price and reputation. Furthermore, the only social value was a significant predictor of willingness to pay. Although the direct effect of COO on willingness to purchase was not significant, the COO had a significant indirect effect on willingness to pay via social value. Finally, the COO has a stronger effect on monetary price expectation among customers who were aware of the country brands than those who were unaware. Originality/value: The study extends the body of knowledge related to the effect of COO during the pre-purchase process and provides important implications for retailers who are looking to enter an overseas market such as China.